Ames v. Ohle

219 So.3d 396

Ecetra N. AMES

v.John B. OHLE, III, J.P. Morgan Chase & Co. f/k/a Bank One Corporation, Douglas Steger and Kenneth A. Brown

NO. 2016–CA–0612

Court of Appeal of Louisiana, Fourth Circuit.

APRIL 26, 2017

Gladstone N. Jones, III, Lynn E. Swanson, H. S. Bartlett, III, Catherine E. Lasky, Lindsay Reeves, JONES, SWANSON, HUDDELL & GARRISON, LLC, 601 Poydras Street, Suite 2655, New Orleans, LA 70130, COUNSEL FOR PLAINTIFF/APPELLANT

John W. Hite, III, SALLEY HITE MERCER & RESOR, LLC, One Canal Place, 365 Canal Street, Suite 1710, New Orleans, LA 70130—AND—J. Gregory Deis, Stephen J. Kane, MAYER BROWN, LLP, 71 S. Wacker Drive, Chicago, IL 60606, Cesar R. Burgos, Robert J. Daigre, Corina E. Salazar, Gabriel O. Mondino, George McGregor, BURGOS & ASSOCIATES, LLC, 3535 Canal Street, New Orleans, LA 70119–6135, COUNSEL FOR DEFENDANT/APPELLEE

(Court composed of Judge Terri F. Love, Judge Edwin A. Lombard, Judge Joy Cossich Lobrano, Judge Rosemary Ledet, Judge Regina Bartholomew–Woods)

Judge Edwin A. Lombard

The Appellant, Hugh Uhalt,¹ seeks review of three district court judgments in the instant appeal: a January 26, 2016 judgment dismissing respondeat superior claims against Appellee, J.P. Morgan Chase & Co. f/k/a Bank One Corporation ("Bank One"); a February 4, 2016 judgment dismissing his remaining claims against Bank One; and a March 23, 2016 judgment granting an exception of res judicata of Appellee John Ohle, III ("Ohle"). Finding that the judgment of the district court granting Ohle's exception of res judicata is neither manifestly erroneous nor legally incorrect, we affirm. Moreover, pursuant to our de novo review, we find that there are no genuine issues of material of fact precluding the granting of Bank One's respective motions for summary judgment. Lastly, Bank One's Answer to Appeal is denied as moot.

FACTS AND PROCEDURAL HISTORY

The facts of this matter were previously set forth in Ames v. Ohle , 11-1540 (La.App. 4 Cir. 5/23/12), 97 So.3d 386, as follows:

In 1998, plaintiff, Ecetra N. Ames, hired defendant, John B. Ohle, III, to provide tax and financial planning services.² Ohle was employed by defendant, Bank One, from 1999 through 2002 in the bank's Innovative Strategies Group.³ In December 1999, Ames executed an instrument establishing a Charitable Remainder Unitrust ("Trust"), which designated Ohle as trustee.⁴ Ames asserts that she initially funded the trust with almost $5 million, followed by contributions in almost $3 million over the next two years. Ames alleges that in 2001, Mr. Ohle approached her about investing in a hedge fund called Carpe Diem Dynamic Fund Linked Warrants ("Carpe Diem Warrants"). Ames agreed to invest $5 million in Carpe Diem Warrants. After the $5 million transfer was made, Ames alleges that Ohle instructed the Carpe Diem fund to withhold $250,000 as a fee for the purchase of the warrants. Ames asserts that she was not informed that there would be any fees for the purchase of the Carpe Diem Warrants. Ames asserts that at the same time Ohle purchased $4.75 million worth of Carpe Diem Warrants on Ames's account, he transferred $2 million of the Trust's funds to purchase additional Carpe Diem Warrants. This transfer involved a fee of $100,000, which Ames asserts was not disclosed to her.

Ames also asserts that defendant, Douglas Steger, at the direction of Ohle, directed the Carpe Diem fund to send $300,000 of the $350,000 of fees collected by Ohle to the bank account of Invested Interest, a company based in San Francisco, California and wholly owned by Individual "A." Ames's petition states that Individual "A" is an unnamed, non-defendant co-conspirator, who is an investment advisor and friend of Ohle. Ames asserts that on November 27, 2001, Ohle directed $347,834 to be transferred from the Trust to Carpe Diem. Subsequently, Ohle directed Carpe Diem to send the $347,834 in funds to Invested Trust. Ames alleges that Individual "A", at the direction of Ohle, through several transactions sent a total of $375,000 of her money to a bank account owned by Kenneth Brown and his then wife at Gulf Coast Bank. Ames further alleges that another $267,634 of her money was transferred to a bank account owned by Ohle at Hibernia Bank. Ames asserts that she had no knowledge of these transactions.

Ames alleges that Ohle and Brown used the funds improperly deducted from Ames's Carpe Diem investment to fund Brown's position as a third-party investor in the "Hedge Option Monetization of Economic Remainder" ("HOMER"), which is a tax strategy sold by Ohle and Bank One to high net-worth individuals. Ames further alleges that Ohle, Brown, and Bank One received significant income from their roles with regard to the HOMER tax strategy. Specifically, Ames asserts that Bank One received over $5,000,000 in fees for referring its clients to the HOMER strategy.⁵

In March 2003, Ames requested that Ohle provide her with an accounting for the Trust. Ames asserts that Ohle falsely told her that $350,000 in fees was paid entirely to Steger. After learning, in August 2003, of Ohle's mishandling of the Trust, Ames and Ohle executed a settlement agreement. However, Ames asserts that the accounting did not apprise her of the following: money taken from the Trust that was funneled through Carpe Diem; the withdraws by Ohle from the Trust; or the use of Carpe Diem fees and Trust funds to fund the HOMER tax strategy.

In 2008, Ohle was indicted by a grand jury in the Southern District of New York for various fraud and tax offenses. Ames asserts that it was within the course of Ohle's criminal trial that she discovered for the first time that Ohle benefited from the $350,000 of fees she and the Trust were charged for the purchases of Carpe Diem Warrants. In addition, Ames also asserts that it was at this time that she first learned of Ohle's $347,834 transfer from the Trust to Carpe Diem to fund the HOMER tax strategy. In June 2010, Ohle was found guilty as charged.

After further details of Ohle's mishandling of Ames's Trust were disclosed throughout Ohle's criminal trial, in October 2009, Ames filed suit against the same defendants in the instant case in federal court alleging claims under RICO as well as several state law claims. Ames v. Ohle , 2010 WL 5055893, p. *2 (E.D.La.2010). The federal court dismissed Ames's RICO claims as untimely based on the "injury discovery" rule, which determines when a RICO claim accrues. Id. at *2, *4.... Further, the federal court declined to exercise jurisdiction over Ames's remaining state law claims since the only federal law claims were dismissed at an early stage of the litigation. Id.

On January 14, 2011, Ames filed her petition in this suit. Bank One filed multiple exceptions, including exceptions of preemption, prescription and no cause of action, which were adopted by the other defendants, Brown and Steger. The district court sustained Bank One's exception of prescription by oral ruling on May 27, 2011.

Ames v. Ohle , 11-1540, pp. 1-5 (La.App. 4 Cir. 5/23/12), 97 So.3d 386, 389–90, decision clarified on reh'g (July 11, 2012), writ denied , 12-1832 (La. 11/9/12), 100 So.3d 837.

In the above-referenced appeal, Mrs. Ames sought review of the district court's grant of Bank One's exception of prescription. We reversed in part the portion of the district court's judgment "sustaining Bank One's exception of prescription as to her [Mrs. Ames's] claim for fraud" and remanded for further proceedings. In all other respects, the grant of the exception of prescription was affirmed. On rehearing, we clarified that Mrs. Ames's fraud claim "is personal in nature" and is subject to a ten-year prescriptive period. Id.

Subsequently, Ohle filed exceptions of prescription and res judicata . The district court granted the exception of res judicata dismissing Mrs. Ames's claims against Ohle, with prejudice. Bank One also filed a motion asserting that it was entitled to summary judgment on the following issues: not being a proper party defendant, respondeat superior, fraud, and civil conspiracy. The district court ultimately granted Bank One's motion for summary judgment in full.

Mr. Uhalt timely filed the instant appeal. He raises four assignments of error:

1. The district court erred in granting Ohle's exception of res judicata on the basis of a prior settlement agreement that was reached through his fraudulent concealment of the information that forms the basis of Mr. Uhalt's claims in this matter.

2. The district court erred in granting summary judgment to Bank One on the issue of Ohle's employment status, finding as a matter of law that he was employed by ors Corporation ("BOIA") rather than Bank One, where voluminous evidence shows a genuine dispute of material fact as to Bank One's employment of Ohle.

3. The district court erred in granting summary judgment to Bank One on Mr. Uhalt's respondeat superior claims, on the basis of a lack of benefit to Bank One from Ohle's conduct, where the evidence shows a genuine issue of material fact regarding the benefit received by Bank One.

4. The district court erred in granting summary judgment to Bank One on Mr. Uhalt's direct fraud claims against Bank One, where there is evidence in the record showing a genuine dispute of material fact regarding Mrs. Ames's reliance on Bank One's role as an investment advisor and regarding what actions Mrs. Ames would have taken had Bank One warned her of Ohle's wrongful actions.

Exception of Res Judicata

In his first assignment of error, Mr. Uhalt argues that his claims of fraud against Ohle are not barred by the exception of res judicata and the terms of the 2003 Settlement Agreement. He avers that the Settlement Agreement was only applicable to "all matters disclosed;" however, the claims at issue were unknown to Mrs. Ames at the time she executed the Settlement Agreement. Ohle, according to Mr. Uhalt, failed to meet his burden of showing that the Settlement Agreement barred the instant claims. He further asserts that it is...